Talk has been circulating that the Inland Empire, specifically Corona, Riverside, and Ontario, is beginning to devise plans to create a culture around the new transit systems. Currently, the transit system in Corona and downtown Riverside links the two cities together. City officials are suggesting linking Los Angles to the metro links as well. Is the Inland Empire ready for the Metro lifestyle its city officials say it is?

Everyone who has experienced the frustration of driving the 91 freeway can attest to the benefits a metro system linking Orange County, the Inland Empire, and Los Angeles together would have. However, thought has to be given to the expense this would cost to each city overall. Our country is in a great recession with the Inland Empire being one of the most economically poor counties in California. Expansion of the metro link to surrounding cities would be a huge cost. Currently, the metro link only links the major cities, Riverside to Corona leaving the pedestrian a large walking distance from the metro link to work, retail, and housing.

Expanding the metro link system would require more metro link stations to be built providing easier access to the workplace, home, and retail outlets. In addition, more housing, retail, and restaurants would need to be established by these specific stations. City officials and developers would love to see these changes take place, but without the aid of investors to back up the city’s vision, the project is at a standstill.

This new development of a downtown lifestyle being brought to the forefront of the Inland Empire provides the opportunity for much needed growth and improvement of the area. The initial costs of the project would be steep, but could possibly pay off in the future as the accessibility and charm of a new lifestyle sweeps the Inland Empire. Perhaps, the Inland Empire would be seen as more of a desirable location with the availability, diversity, and opportunity of corner cafes, high rise apartment buildings, and high end shops and restaurants lining the streets.  This new exciting lifestyle could be exactly what the Inland Empire needs especially at times like this, a fresh start.

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I want to take a bit of a side-trip from my usual hard-hitting commercial mortgage loan and investment property advice. I had the opportunity to spend a few days at the Pacific Life Open tennis tournament in Indian Wells, California last week while on vacation and noticed a minor, but significant change in the rules. The change was minor in that the players were allowed to ask for a time out to spend time with their coaches between sets. It was significant because the opportunity to speak with their coaches helped several players turn their games around.

For those of you not familiar with the rules of the Association of Tennis Professionals (ATP) coaching during a match was, until recently, against the rules. In fact, a player could be penalized points during a match if the umpire felt that he or she was getting verbal or non-verbal coaching tips during a match.

I point out this concept of “coaching” because it has implications in commercial real estate investing.

Have you ever stopped to consider why the best sports figures and Fortune 500 CEOs hire coaches? On the surface it doesn’t make sense. These people are the best in the world at what they do, so who is realistically going to be able to help them get even better? Well, as I’m sure you already know, the reason that they are the best is because they have coaches. Coaches provide several things for those at the top of their profession and those seeking to improve their performance:

1. An external, unemotional perspective to help the one coached see things that they can’t perceive about their performance.

2. Information on new aspects of the profession or related professions to help increase performance.

3. Networks of other professionals who can help in areas where the performer is weak.

4. Experience from their past challenges, helping the one coached move ahead faster.

So what does this have to do with commercial real estate?

Whether you’re just starting out or are a seasoned development professional, I can guarantee that you’ll get better if you enlist a commercial coach or coaches to help you grow. So where can you find a commercial real estate investment coach?

Let me note that we will soon release coaching programs for investors and loan agents who want to break into and excel in the commercial side of the business (email us here for more information: Coaching@InvestmentPropertyInsider.com). However, until those coaching programs are up and running, here are some suggestions on finding and using a coach to help you get better at investing faster:

1. Consider a retired commercial developer, investor, or real estate agent. You could check with a local commercial real estate office to ask if anyone is retiring soon or has recently left the business. Approach them with the concept of becoming an apprentice and giving them a piece of your profits. They might just enjoy passing on their wealth of experience.

2. Check with a local S.C.O.R.E. office to see if there is anyone who has experience in the commercial real estate investing or development businesses. S.C.O.R.E. is a non-profit business resource group and can be found at www.SCORE.org.

3. Do you know anyone in the business that is already successful? Approach them with the idea of becoming an apprentice, but be very mindful of their time when you do. Again, consider offering them some of your profits as compensation.

4. Consider a personal or business coach for hire. There are a lot of people in this business and some of them are very good. I’d caution you to be very careful whom you hire, however. You’re looking for a specialized type of coaching here, more than the generalized life coaching that a lot of these people offer.

I would suggest a few other points in selecting a commercial real estate coach:

1. Make sure that they have actual experience in commercial real estate investment, sales, or lending.

2. Hopefully they will provide you with access to experts in related fields to help you understand all aspects of the business.

3. They should allow you to access other investors so that you can network, share resources, and benefit from each other’s experience.

4. They should provide an archive of useful information, resources, and tools for your benefit, accessible at any time you need.

As I mentioned, having a coach handy helped several players turn their matches around to advance to the next level at the Pacific Life Open. You should strongly consider your own coach to help you get to the next level in your commercial real estate game, too.

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Orange County Apartment Rental Market Trends (http://www.apartmentratings.com)

Declining Orange County Apartment Rental Rates

According to the Orange County Register article dated July 25, 2010 by Jonathan Lasner, Orange County apartment rents are down 2% compared to last year at this time. This number is stunning. Orange County has not seen such a large drop since 1940.

This nine month streak of declining rental rates has been discouraging to say the least with June’s annual rate at the smallest decline at 0.4%. Some say that we are now on the rental rise after hitting rock bottom at the close of 2009. This is now becoming a renter’s market and individuals across Southern California are not willing to pay premiums for apartments and condominiums. With the surge of low rent opportunities and homeowners putting their own homes on the rental market scene, landlords are hopeful that this is the answer they have been waiting for.

Nationwide Apartment Rental Market Still Suffers

The question still remains: Are there too many rentals for the amount of renters? With the unemployment rate at an all time low and the economic downturn in full swing, I highly doubt that there are too many options for too few people. Even with the new marketing approach to lure in renters, 6.4% of Orange county’s apartments were empty the 2^nd quarter. Even though the OC does not have the lowest vacancy rates in the apartment market, the nation claimed a 7.8% vacancy rate last

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U.S. Office Vacancy Analysis 2nd Qtr 2010 (http://www.socalofficerealestateblog.com)

Decreased Office Rents Spur Orange County Market

According to the OC Register article dated August 15, 2010,“Rent Cuts Inject Life into Market”, Erika Chavez reports that the Orange County commercial real estate market has been hit hard especially for the first two quarters of 2010. Office vacancy rates have increased from 18.2% from the 1^st quarter to 18.4% in the 2^nd quarter.

Businesses aggressively signed leases for a reported additional 200,000 square feet causing these elevated vacancy rates for the 2^nd quarter. Last year, the average asking rent was estimated at $2.30 per square foot whereas today, it falls right at $2.06 per square foot. Despite the heavy economical blow, the Orange County rental market has seen a glimpse of hope on the horizon.

Landlords are now offering extensive cuts on rent just to entice a steady stream of customers. Businesses are taking advantage of these rent cuts and seeing the potential opportunity for growth and expansion while it is still affordable.

Office Vacancy Rates Remain High Nationwide

Even though renters are eager, the nationwide vacancy rate rose 3.4 percentage points in the last year. Orange County is 4^th in the category of most aggressive rent cuts. Leading the nation in rent cuts for the year is Phoenix up 4.2 percentage points, Palm Beach, FL, up 4 percentage points, and Fairfield, Conn, up 3.5 percentage points. Reports have stated that in Orange County office rents have fallen by 1.5% between the 1^st and 2^nd quarters of this year. These OC cuts are the most drastic by big landlords amongst the 82 nationwide markets surveyed. After 2^nd quarter reports came in, Orange County had 20.7% of vacant office space.

On a nationwide scale, these astronomical vacancies have risen for a 10^th consecutive quarter which has not been seen by our country for over 17 years. It is going to take a while to see any changes in this bleak market. Landlords are hoping to entice renters with discounted rent rates; however, it will take a lot more than discounted rate to turn the Orange County commercial market around.

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For assistance with Commercial Real Estate — investment sales, asset management, commercial REO, commercial BOV’s, commercial broker price opinion. Contact Michael Duhs, Managing Director of East West Commercial at Michael.Duhs@EastWestCommercial.com or http://www.EastWestCommercial.com or (949) 939-8352.

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Photo Credit: www.cartoonstock.com

Bank Closures Top 100

Bank closures topped 100 nationwide to date, already exceeding last year’s calendar year. At this time last year, regulators closed 64 banks due to the recession and loans defaulting. The year 2009 had 140 bank closures. This year, however, a total of 101 bank closures have occurred so far.

This year, the U.S. will definitely see numbers far larger.

Forecasted Outlook for 2010

If this year’s bank closure pace continues the number of bank closures expected for 2010 is estimated at 200 or more, which is a 43% increase over last year’s closure.

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For assistance with Commercial Real Estate — investment sales, asset management, commercial REO, commercial BOV’s, commercial broker price opinion. Contact Michael Duhs, Managing Director of East West Commercial at Michael.Duhs@EastWestCommercial.com or http://www.EastWestCommercial.com or (949) 939-8352.

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• Digitally generated review of the asset and surrounding market
• Condition of the property at time of analysis.
• Comparable sales and listings including days on market and proximity to property.
• Pictures if requested
• Forecast of property values in the area.
• Review  of any potential environmental, structural, mechanical or cosmetic problems by visual inspection.

______________________________________

For assistance with Commercial Real Estate — investment sales, asset management, commercial REO, commercial BOV’s, commercial broker price opinion, contact  Michael Duhs, Managing Director of East West Commercial at Michael.Duhs@EastWestCommercial.com or http://www.EastWestCommercial.com or (949) 939-8352.

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The reason for the BPO report is to meet funding time constraints and costs.

The Commercial BOV or BPO is a fraction of the cost of commercial real estate appraisals and can be delivered to the lender within 24 – 48 hours.

Commercial BOV’s and BPO’s are provided by brokers nationwide. Most brokers specialize in their field or asset type.

The above lenders’ LTV (loan to value) are typically low and so are the loan amounts. The lenders deem these transactions to be low risk as compared to the larger commercial loans…hence, the popularity of the Commercial Broker Price Opinion BOV or BPO report.

Unlike a full blown certified appraisal issued by a certified appraiser, the Commercial Broker Price Opinion BOV or BPO  is only an opinion of the price of a property if it were being placed on the market for a sale. It is not a report that leads into the value of a property such as a certified appraisal would reflect.

The Commercial Broker Price Opinion BOV or BPO takes into account (when available) comparable sales of like-for-like properties, cost per square foot comparables or per unit comparables, lease comparables, capitalization rate comparables and gross rent multiplier (GRM) comparables.

This along with other economic and financial factors of the borrower is also surveyed and considered.



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